ACIT CC 39, MUMBAI V. AMBIT REALITY P.LTD, NAVI MUMBAI

ITA 1370/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3615 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MALATHI SRIDHARAN
• Assessee Lawyers: RAMESH JAIN
• Keywords: Unexplained expenditure; Search and seizure; Document seized; Initiation of penalty proceedings; Difference of opinion; Documents seized
• Section: 69C; 132

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHUKLA,JUDICIAL MEMBER ./I.T.A. NO.1370/MUM/2014 , / ASSESSMENT YEAR: 2007-08 ACIT,CC-39 GROUND FLOOR,AAYKAR BHAVAN, MUMBAI-400 020 VS. M/S. AMBIT REALITY PVT. LTD. DRONAGIRI HOUSING COMPLEX BUILDING NO.GH-10,SECTROR-30, POST BOKADVIRA VILLAGE, URAN TALUKA,RAIGAD DIST. NAVI MUMBAI-400 702. PAN: AAGCA 0057 J ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: MS. MALATHI SRIDHARAN ASSESSEE BY: SHRI RAMESH JAIN, / DATE OF HEARING: 08.03.2016 / DATE OF PRONOUNCEMENT: 08.03.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM CHALLENGING THE ORDER DTD.30.11.2013 OF THE CIT-(A) 37,MUMBAI THE ASSESSING OFFICER (AO) HAS FILED THE ABOVE MENTIONED APPEAL.THE EFFECTIVE GROUND OF APPEAL IS ABOUT DELETION OF PENALTY IMPOSED BY THE AO,U/S.271(1)(C)OF THE ACT. BRIEF FACTS: 2. THE ASSESSEE BELONGS TO JAI CORP GROUP OF CASES WHI CH WAS A PARTNER IN TWO MAJOR SPECIAL ECONOMIC ZONES(SEZ),BEING DEVELOPED IN THE VICINIT Y OF MUMBAI-NAVI MUMBAI SPECIAL ECONOMIC ZONE(NMSEZ)AND MUMBAI SPECIAL ECONOMIC ZON E(MSEZ).THE GROUP ENTITIES HAD PURCHASED VAST TRACTS OF LAND IN THE VICINITY OF THESE SEZS WITH AN OBJECTIVE TO DEVELOP THE LANDS INTO SATELLITE TOWNSHIPS IN THESE AREAS W ITH NECESSARY AMENITIES AND INFRASTRUCTURE ANTICIPATING POTENTIAL PRICE RISE AND GOOD RETURN F OR THEIR INVESTMENT IN FUTURE.THESE LANDS HAVE BEEN PURCHASED IN THE NAMES OF ABOUT 100 COMPA NIES INCLUDING THE APPELLANT.THE REAL ESTATE OPERATIONS OF THE GROUP WERE HANDLED BY VIRE NDRA JAIN,GAURAV JAIN AND DILIP DHERAI. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE OFFICE PREMISES OF THE GROUP AND ITS CLOSE ASSOCIATES AND RESIDENTIAL PREMISES OF ITS KEY PERSONS ON 5.3.2009.IN THE COURSE OF SEARCH, INCRIMINATING EVI DENCE WAS FOUND AND SEIZED PROVING THE FACT THAT THE ASSESSEE HAD MADE CASH PAYMENTS OVER AND ABOVE THE CHEQUE PAYMENTS ENTERED IN THE BOOKS OF ACCOUNT FOR PURCHASE OF LAND. THE F ACTUM OF CASH PAYMENTS WAS CONFIRMED BY DILIP DHERAI IN THE COURSE OF SEARCH.LATER ON AFTER TWO-AND-HALF MOTHS FROM THE DATE OF SEARCH,HE FILED AN AFFIDAVIT BEFORE THE DDIT(INV.), ON 14. 05.2009,AFFIRMING THAT THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ON 05.03.2009 WAS TAKEN FORCIBLY AND UNDER PRESSURE. HOWEVER,THE AO REJECTED THE AFFIDAVIT BY HOLDING IT AS A SELF-SERVING DOCUMENT. BASED ON SCRUTINY OF THE SEIZED DOCUMENTS,TOTAL UNE XPLAINED EXPENDITURE INCURRED IN CASH ON ACQUISITION OF LANDS WAS ESTIMATED BY THE AO AT RS. 43.46 CRORES.THE AMOUNT OF UNEXPLAINED EXPENDITURE INCURRED IN CASH AS APPORTIONED AMONG A LL LAND COMPANIES (INCLUDING THE APPELLANT)IN THE RATIO OF COST OF LAND PURCHASED BY SAID COMPANIES UP TO 28.11.2008. ON THE BASIS OF SAID APPORTIONMENT, AN ADDITION OF RS.46, 49,000/- WAS MADE IN CASE OF THE APPELLANT U/S.69C THE ACT BY THE AO. IN THE APPELLATE PROCEED INGS,THE FIRST APPELLATE AUTHORITY (FAA) CONFIRMED THE ORDER OF THE AO. 1370/14-AMBIT 2 3. IN THE MEANWHILE,THE AO INITIATED PENALTY PROCEEDIN GS U/S.271(1)(C)OF THE ACT.AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE,THE A O HELD THAT CASH PAYMENTS HAD BEEN MADE IN LAND TRANSACTIONS WHICH WERE NOT REFLECTED IN TH E BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THAT IT HAD PAID UNEXPLAINED CASH TO THE LAND OWNERS AS PART OF THE PURCHASE CONSIDERATION OF THE LAND AND THAT SUCH CASH PAYMEN TS WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT AND THEREBY THE ACTION OF THE APPELLANT ATTRACTED THE PROVISION OF SECTION 69C OF THE ACT.THE AO LEVIED A PENALTY OF R S.38,99,580/-,BEING 100% OF UNDISCLOSED INCOME ASSESSED IN CASE OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA AND ARGUED THAT THE AO HAD MADE ADDITIONS BASED ON THE STATEMENT RECORDED AND DOCUMENTS SEIZED FROM THE THIRD PARTES,THAT IT HAD MADE A TRU E AND FULL DISCLOSURE OF THE PARTICULARS OF ITS INCOME,THAT THE DIFFERENCE IN THE ASSESSED INCOME A ND THE RETURNED INCOME WAS ON ACCOUNT OF THE ADDITION WHICH THE AO HAD CONSIDERED AS UNDISCL OSED INCOME OF THE ASSESSEE,THAT THE ADDITION U/S 69C HAS BEEN MADE BY THE AO MERELY BAS ED ON CERTAIN DOCUMENTS FOUND AT THE PREMISES OF DILIP DHERAI WHO WAS NEITHER A DIRECTO R NOR THE EMPLOYEE OF THE ASSESSEE- COMPANY, THAT NO RELIANCE COULD BE PLACED ON THE DO CUMENTS SEIZED FROM HIM,THAT THAT THE ADDITIONS HAD BEEN MADE ON AD HOC/ESTIMATED BASIS A ND NO CONSTRUCTIVE EVIDENCE HAS BEEN BROUGHT ON RECORD , THAT THIS DIFFERENCE OF OPINION DOES NOT AT ALL WARRANT THE INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C)OF THE ACT. THE AP PELLANT FURTHER SUBMITTED THAT THE ADDITION U/S.69C MADE BY THE AO HAD BEEN DELETED BY THE ITA T,VIDE ITS ORDER DATED 22.03.2013. IT IS SUBMITTED THAT THE ITAT HAD HELD THAT THE SEIZED DO CUMENTS RELIED UPON BY THE AO DID NOT ESTABLISH ANY PAYMENT OF CASH BY THE ASSESSEE FOR A CQUIRING LAND AND THUS THE PENALTY U/S. 271(1)(C)LEVIED BY THE AO BASED ON THESE ADDITION W OULD NOT SURVIVE.CONSIDERING THE FACT THAT THE TRIBUNAL HAD DELETED THE ADDITIONS MADE IN QUANTUM PROCEEDINGS,THE FAA DELETED THE PENALTY IMPOSED BY THE AO. 5. BEFORE US,REPRESENTATIVES OF BOTH THE SIDES AGREED THAT THE TRIBUNAL HAD DELETED THE ADDITIONS, THAT TRIBUNAL HAD CONSIDERED THE ISSUE O N MERITS ALSO. WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL A ND SAME READS AS UNDER : . IN THE PRESENT CASE, THE IMPUGNED DOCUMENTS W ERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE BUT WAS FORMED FROM THE POSSESSION OF A THIRD-PARTY I.E. DILIP DHERAI. MERE MENTION OF THE NAMES OF THE VILLAGES WHERE THE COMP ANIES MAY HAVE PURCHASED LENGTHS WOULD NOT GIVE ANY BASIS TO ASSUME/RESUME/SURMISE THAT TH E NAME OF THE COMPANIES ARE MENTIONED IN THE IMPUGNED DOCUMENTS. THE VERY FOUNDATION OF SECT ION 153C HAS BEEN SHAKEN BY NOT FULFILLING THE CONDITION PRECEDENT FOR THE ISSUE OF NOTICE 19. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE IMPUGNED SEASON DOCUMENTS, WE HAVE NO HESITATION TO HOLD THAT ACTIO N TAKEN UNDER SECTION 153C OF THE ACT IS BAD IN LAW 22. THE ENTIRE DISPUTE REVOLVES AROUND THE ALLEGE D CASH PAYMENT AMOUNTING TO RS. 43 CRORES APPROXIMATELY AND WHICH HAS BEEN ADDED UNDER SECTION 69C OF THE ACT 23 THE ASSESSEE MUST HAVE BEEN FOUND TO HAVE INCURRED ANY EXPENDITURE TO INVOKE THE PROVISIONS OF SECTION 69C OF THE ACT.HOW EVER THE ALLEGATION MADE BY THE LOWER AUTHORITIES ARE NOT SUPPORTED BY ACTUAL CASH PASSIN G HANDS. THE ENTIRE ADDITION ARE BASED ON THE SEA DOCUMENTS AND NO OTHER MATERIAL HAS BEEN AD VERTED TO AND WHICH COULD CONCLUSIVELY SHOW THAT THE HUGE AMOUNT OF THE MAGNITUDE MENTIONE D IN THE SEIZED DOCUMENTS TRAVELLED FROM ONE SIDE TO OTHER. THE REVENUE AUTHORITIES HAV E NOT BROUGHT A SINGLE STATEMENT ON RECORD OF THE VENDOR OF LAND IN DIFFERENT VILLAGES. NONE O F THE SELLER HAS BEEN EXAMINED TO SUBSTANTIATE THE CLAIM OF THE REVENUE THAT EXTRA CA SH ACTUALLY CHANGED HANDS. 24.. IN THE PRESENT CASE NONE OF THE SELLERS HAVE BEEN EXAMINED BY THE AO TO STRENGTHEN HIS VIEWS THAT CASH HAS BEEN PAID OVER AND ABOVE TH E REGISTERED AMOUNT. THERE IS NOT A SINGLE DOCUMENT/EVIDENCE OF PARTIES INVOLVED IN THE SALE O F LAND AT DIFFERENT VILLAGES BROUGHT ON 1370/14-AMBIT 3 RECORD TO SHOW THAT AN AMOUNT OTHER THAN THE PAYMEN T OF CONSIDERATION HAS CHANGED HANDS. NO CONFESSION FROM THE SELLERS HAVE BEEN BROUGHT ON RECORD.. 25. IN OUR CONSIDERATE VIEW (SIC) THERE BEING NO EVIDENCE TO SUPPORT THE REVENUES CASE THAT I USE FIGURE, WHATEVER BE ITS QUANTUM, OVER AN D ABOVE THE FIGURE IN THE RECORDS AND ACCOUNTS CHANGED HANDS BETWEEN THE PARTIES, NO ADDI TION COULD THEREFORE BE MADE UNDER SECTION 69C OF THE ACT TO THE INCOME OF THE ASSESSE E CONSIDERING THE ENTIRE FACTS BROUGHT ON RECORD, WE HAVE NO HESITATION TO HOLD THAT EVEN ON MERITS NO ADDITION COULD BE SUSTAINED. 26. SINCE WE HAVE ALLOWED THE ISSUE IN CASE OF THE PRESENT ASSESSEE ON BOTH COUNTS I.E.P.ON LEGAL ISSUE AND ON MERIT AND THE ISSUE INVOLVED IN ALL OTHER APPEALS OF OTHER ASSESSEES ARE SIMILAR AND IDENTICAL,THOUGH QUANTUM MAY DIFFER, FO R SIMILAR REASONS, WE QUASH THE ASSESSMENT AND DELETE THE ADDITIONS ON MERIT AS WEL L AS ON POINT OF LAW IN ALL OTHER CASES ALSO. AS THE TRIBUNAL HAS DELETED THE ADDITIONS ON MERITS AND ON POINT OF LAW TOO,THEREFORE, IN OUR OPINION PENALTY LEVIED BY THE AO UNDER SECTION 271( 1)(C) WAS RIGHTLY DELETED BY THE FAA. CONFIRMING HIS ORDER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,AP PEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNC ED IN THE OPEN COURT ON 8 TH MARCH, 2016. 8 , 2016 SD/- SD/- ( / AMIT SHUKLA ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.03.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT/ 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.